Surge in Hispanic applicants seeking financial disaster assistance; Help is on the way

A massive increase in the number of Hispanic applicants seeking financial disaster assistance has prompted JPMorgan Chase and Money Management International (MMI) to team up to address the situation. The bank’s grant will help MMI, one of America’s largest nonprofit credit counselors, expand its Hispanic Centers for Financial Excellence.

In the first quarter of 2021, MMI completed 777 percent more financial counseling sessions with Hispanic clients than it did in the first quarter of 2020. That far outpaced the upswing among non-Hispanic groups (which was still high, at 251 percent).

In 2020, demand for MMI’s services roughly doubled among Hispanic and Black populations. The organization notes that was significantly higher than the increase for white applicants. It also mirrors what has occurred in the job market. According to the Bureau of Labor Statistics, the current unemployment rates for Black and Hispanic Americans are 9.7 percent and 7.9 percent, respectively, compared to 5.3 percent for white Americans.

In a September 2020 NPR survey, 72 percent of Latino households reported serious financial problems, compared with 60 percent of Black households and 36 percent of white households. In Feb. 2021, Bankrate found that 37 percent of Black respondents and 32 percent of Hispanic respondents had more credit card debt than emergency savings. Just 26 percent of whites respondents said that.

Free yourself from credit card debt

Helping people pay down their credit card debt is one of Money Management International’s specialties. The organization is able to negotiate lower rates with creditors and comes up with plans that work for all parties. A sample scenario is paying an interest rate of 6 percent to 10 percent over 2 to 5 years, compared with an average credit card rate over 16 percent, which could drag on for decades if the cardholder only makes minimum payments. Certain MMI services are completely free while others require a small fee.

While some people are able to lower their rates by asking their card issuer or by signing up for a 0 percent balance transfer card or a personal loan, it can help to have an expert on your side. I’ve gotten to know MMI over the past several years, and I really appreciate the good work they do on behalf of their clients. Just like home repairs, sometimes you can do it yourself, but sometimes it makes more sense to call a professional. I think the tipping point is often something like $5,000 in credit card debt. If you owe more than that, or even if you owe less but find it overwhelming, MMI can help.

Another big reason to work with a nonprofit credit counselor such as MMI is if your credit score is too low to qualify for a 0 percent balance transfer card or a personal loan with an attractive interest rate. These days, 700 is a common cutoff. If your score is lower, the DIY approach is less feasible, but nonprofit credit counseling is still very much in play.

Don’t fall for debt settlement

While debt settlement agencies make an attractive pitch—claiming they can get you out of credit card debt for pennies on the dollar—I do not recommend this approach. These companies usually tell debtors to stop paying their bills for a while and then they try to use that as leverage to negotiate a lower payoff amount. This might not even work. If it does, it almost always trashes your credit score because of the late payments and the fact that you didn’t pay the full amount you owed.

Reputable nonprofit credit counselors such as MMI, on the other hand, help you pay everything back over time while lowering your interest rates, consolidating your payments and providing helpful advice. MMI says the average participant in one of its debt management plans adds 62 points to their credit score over two years. And depending on how much you owe, you could save hundreds or even thousands of dollars in interest.

More about MMI’s services for Hispanic clients

According to a press release, MMI will use the JPMorgan Chase grant to enhance its Spanish-language website, es.moneymanagement.org, along with:

• Producing mobile-friendly Spanish-language content and enhancing the ability of Latinx consumers to connect with a counselor.
• Creating additional educational workshops and video content on a variety of personal finance topics relevant to the Latinx community, including understanding the U.S. financial system, credit, debt, budgeting, fair housing, disaster recovery and more.
• Expanding web-based marketing practices to increase MMI’s reach to Hispanic communities, allowing the nonprofit to serve more financially-distressed Hispanic families.

“When COVID made our traditional, in-person way of working with clients at the Centers less practical, we pushed our operations online and over the phone—and found ourselves answering an avalanche of need from Hispanic consumers across the country,” said Emanuel Rivero, Director of MMI’s Hispanic Centers for Financial Excellence. “With JPMorgan Chase’s help, we’ll be able to take this work even farther, and help people get the tools to better manage their finances, in English or in Spanish, in a format tailored to their needs.”

Have a question about credit cards? E-mail me at ted.rossman@bankrate.com and I’d be happy to help.